EDSR MEMORANDUM 10-14-1997 ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY
MEMORANDUM
TO: Economic Development Authority
FROM: Paul T. Steinman, Director of Economic
Development
DATE: October 9, 1997
SUBJECT: Agenda Memo for October 14, 1997,
Meeting
5. West Business Park Development Agreement-Possible Land
Purchase
Staff has had several meetings with Tony Emmerich regarding a
possible joint development agreement for property which is currently
in the process of being foreclosed upon in the West Business Park. It
dik appears as though Mr. Emmerich is in conceptual agreement with
such a development agreement at this time. Staff has attached a
recently modified scope of this development agreement completed by
Attorney David Sellergren.
Staff has also been dealing with Mr. Emmerich regarding a possible
land purchase with excess tax increment dollars. Mr. Emmerich has
indicated an interest in pursuing this and has indicated verbally that
he would sell the land for $1.14 per square foot. Staff has also had
discussions with another West Business Park property owner
regarding a possible EDA land purchase. This second party has
indicated an interest in the sale of a portion of their land to the EDA
prior to the end of 1997. It is staffs intention to negotiate with both
property owners and pursue the one which offers the most favorable
deal.
Mr. Emmerich will be in attendance at Tuesday evenings meeting to
answer questions and address the EDA regarding the joint
development agreement and possible land purchase. The next step in
this process will be to put the actual joint development agreement
together in preparation for execution by the end of November 1997.
The other two West Business Park property owners have also
Ill
13065 Orono Parkway • P. O. Box 490 • Elk River, MN 55330-1743 • (612) 441-7420• Fax (612) 441-7425
Equal Opportunity Housing and Equal Opportunity Employment
EDA Agenda Memo
October 14, 1997
Page 2
expressed a significant interest in this type of joint development
agreement.
6. Micro Loan Request - Gregg Karnis
The EDA Finance Committee met on Thursday, October 9, 1997, to
discuss a micro loan request from Gregg Karnis to construct an Italian
restaurant within Sax Foods. Mr. Karnis' request is in the amount of
$50,000 for a ten year term at an 8.5 percent interest rate.
Mr. Karnis appeared before the EDA Finance Committee to discuss his
loan request. The Finance Committee made the following comments:
• A majority of Committee members felt this type of use
(restaurant new construction) did not meet the guidelines of
the micro loan fund.
• Committee members commented that, based upon their
review of the financial information, and after hearing the
presentation by Mr. Karnis, this project would likely proceed
with or without use of the EDA micro loan.
di The Committee generally felt this deal could be 100 percent bank
financed theprovision of adequate collateral as indicated
givenq
through the applicants business,GLK, Inc.
Mr. Karnis has proposed using, as collateral for this loan,the assets of
his business, GLK, Inc. These assets include numerous pieces of
equipment, furniture, and fixtures related to his pronto pup business
which is in operation for the Minnesota State Fair. The EDA's position
would be subordinateto that of the bank on any such collateral.
The Finance Committee voted 3-1 to recommend denial of Mr. Karnis'
loan request in the amount of$50,000. Committee member Jim
Simpson was,not present at the meeting, but indicated verbal support
of the loan request. The primary reasons given for denial include that
the use isnot a high priority as indicated in the Fund Guidelines, and
that the project will likely proceed with or without use of the EDA
micro loan.
7. Community Venture Network -Presentation by Public Resource
Group
Public Resource Group, Inc., will be represented by Leonard Kirscht
• and Dennis Welch at the EDA meeting to discuss the Community
EDA Agenda Memo
October 14, 1997
Page 3
111 Venture Network Program. Attached in this packet are sample
summaries of approximately 25 businesses which have been showcased
through this program since June of 1997. These samples provide a
good synopsis of the types of companies which are being presented
through this program and should help the EDA measure the value of
its potential involvement in this program.
Mr. Kirscht and Mr. Welch will make a brief presentation to the EDA
and then will be available for questions and comments.
8. TIF Application Dave Decker
The purpose of this agenda item is to set in motion a schedule for the
establishment of Tax Increment District No. 17. This issue will come
back to the EDA at its meeting on November 10 for a more in depth
discussion of this tax increment request. ;Mr. Dave Decker has
submitted a tax increment application for $160,000 to complete a light
industrial/manufacturing, multi tenant building on east Highway 10.
Such building is described as having an initial phase of 25,000 square
feet with the potential of adding an additional 45,000 square feet in
phase two. Mr. Decker's tax increment application has been received
II and is attached. Mr. Decker has also submitted his application fee in
the amount of$5,000.
Mr. Decker and his general contractor, Mr. Gary Santwire, will be
available at the EDA meeting on November 10 to hold a detailed
discussion of this tax increment request.
Recommendation
Staff recommends that the schedule be set in motion by requesting the
City Council to call for a public hearing to be held on February 17,
1998, for the establishment of Tax Increment Financing District No.
17.
9. Review Request for.Contribution to Central Minnesota
Initiative Fund
Attached to this memo is a request from the Central Minnesota
Initiative Fund for contributions from member communities. They are
requesting a contribution from the City of Elk River based upon a
$1.50 per capita in a total amount of$19,929. This amount can be
Aft• paid over a three year period, and all contributions will be matched on
a dollar for dollar basis by the McKnight Foundation.
EDA Agenda Memo
October 14, 1997
Page 4
Attached to this memo is information from the Central Minnesota
Initiative Fund,regarding their request. This request is made each
year to all cities and counties within their 13 county service territory.
Sherburne County has agreed to provide a $10,000 up front
contribution to the Central Minnesota Initiative Fund.
The City Council reviewed this issue and has asked that the EDA
provide a recommendation on a contribution level, if so decided, to the
City Council. Such contribution could be recommended to come from
EDA funds or the Council Contingency Fund.
From staffs perspective, Central Minnesota Initiative Fund certainly
does provide a positive resource for our local economic development
efforts. They have participated in past projects with their business
loan program and seed capital fund. It is debatable,however, whether
our dollars are better spent in the form of a contribution to Central
Minnesota Initiative Fund or to support existing projects and
programs. Also,if such a contribution request is denied by the EDA,
one can only wonder whether it has any bearing upon future loan
requests to the Central Minnesota Initiative Fund.
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